Healthcare Business News

Reform Update: Bipartisan House bill calls for repealing SGR

By Jessica Zigmond
Posted: July 19, 2013 - 4:00 pm ET

Bipartisan leaders on the House Energy and Commerce Committee released the latest iteration of a draft bill (PDF) to repeal Medicare's sustainable growth-rate formula. The plan calls for a five-year period of stable payment increases as physicians transition into new payment models. Still to come are ways to pay for the repeal, which the nonpartisan Congressional Budget Office estimates will cost about $139 billion over 10 years.

Totaling 70 pages, the bill is still a work in progress, as the panel's health subcommittee will consider changes to the legislation next week. Committee members—along with members of the House Ways and Means Committee—have worked throughout the year to craft a bill that has incorporated comments from more than 80 stakeholders. Like previous versions, the bill gives providers the option of leaving traditional Medicare fee-for-service to try new payment models that emphasize better quality and lower costs. What sets it apart from earlier drafts is a proposal to increase payment rates for all physician services by 0.5% every year from 2014 through 2018. That payment increase would continue beyond 2018, and physicians would also have the opportunity to receive an additional 1% increase depending on how they fare in a quality incentive update program, according to staff on the committee's majority side.

Not surprisingly, the bill does not mention how to pay for repealing the SGR. Staff members for the GOP side said members have been clear from the outset that they want to first develop a new, sensible physician payment system and then identify the necessary offsets to pay for it.

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Meanwhile, staff members are confident that lawmakers are closer than before on repealing the SGR. As a sign of strong bipartisan interest, they point to the six representatives who attached their names to it: Rep. Michael Burgess (R-Texas), a physician who serves as the vice chairman of the Energy and Commerce Committee's Health Subcommittee; Rep. John Dingell (D-Mich.); Rep. Frank Pallone Jr. (D-N.J.); Rep. Joe Pitts (R-Pa.), the chairman of the Health Subcommittee; Committee Chairman Fred Upton (R-Mich.); and Rep. Henry Waxman (D-Calif.), the full committee's ranking member. Meanwhile, committee staff members have also worked with their counterparts both on the House Ways and Means Committee and the Senate Finance Committee.

Although pleased with the five-year period of stability, the American Academy of Family Physicians released a statement saying the legislation doesn't go far enough in helping the nation's primary-care providers.

“We are disappointed that the subcommittee's draft does not include a provision to specify a higher base-payment rate for those services provided by primary-care physicians,” said the statement from Dr. Jeffrey Cain, AAFP president. “We continue to believe that primary care offers the most substantial mechanism to improve healthcare quality overall and reduce the growth of healthcare costs, and that the current fee schedule fails to accurately capture the complexity of modern primary-care services.”

Medicare reform draft released

The House Ways and Means Committee on Friday released the text (PDF) of a draft proposal to reform the Medicare program and asked the public to weigh in. Panel members discussed the issue in hearings earlier this year, and this marks the first time they've asked for public input. The draft legislation includes three policy ideas to update cost-sharing within Medicare, including reducing premium subsidies for wealthier seniors under Medicare parts B and D; increasing the annual Medicare Part B deductible; and creating a home health co-payment. In an announcement, the committee noted that each of these proposals were included in President Barack Obama's fiscal 2014 budget proposal. Members of the public can send their comments to

Unusual outreach effort

Proving that politics makes strange bedfellows, Sen. Orrin Hatch (R-Utah) this week sent a friendly letter to the leaders of the three unions—the International Brotherhood of Teamsters, United Food and Commercial Workers and Unite Here—who earlier this month wrote to Senate Majority Leader Harry Reid (D-Nevada) and House Minority Leader Nancy Pelosi (D-Calif.) about their concerns over provisions in the Patient Protection and Affordable Care Act. Among the union leaders' worries is that the 2010 law provides an incentive to keep employees' work hours below 30 hours a week, which they say will lead to both lower pay and a loss of current health benefits for workers. “Since your activities to encourage changes to the law have, to date, been unsuccessful, I want to invite you to join me in an effort to help the Obama administration and Congress understand the full impact the law has had and will continue to have on the labor and health insurance markets once it is fully implemented,” Hatch wrote, “and call for a permanent delay until we are able to come up with a plan that will achieve the law's stated goals of reducing healthcare costs and improving access.”

Vandy official airs grim view

The vice chancellor of Vanderbilt University Medical Center this week offered a grim view of how rapid changes in reimbursement and decreases in healthcare research funding are leading factors in the Nashville-based academic medical center's plan to cut hundreds of millions from its annual budget of about $3.3 billion in the next two years. Writing to colleagues, Dr. Jeff Balser said VUMC aims “to achieve $100 million of budgetary improvement during the current fiscal year ending June 30, 2014, and a total improvement of $250 million by the end of fiscal year 2015.” Called “Evolve to Excel,” the plan includes a series of steps, including the permanent elimination of some positions, an early retirement option for employees, and a re-engineering of workflow that will reduce the need to replace positions that open up after employees leave. The news comes days after Denver Health and Little Rock, Ark.-based Baptist Health said they would eliminate hundreds of jobs.

Follow Jessica Zigmond on Twitter: @MHjzigmond

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